Sustaining Earth Day: Renewables Investment Hits a New High

Earth Day marks the official signing of the Paris Climate Agreement at the United Nations (U.N.) New York headquarters. The Paris deal paves the way for a new era of clean energy growth, providing crucial momentum for the push toward net zero emissions — a goal that requires the near-ubiquitous use of renewables.

The good news: There’s been ample progress to that end. And it appears to be the tipping point for widespread adoption.

Renewable energy has spread across the globe

Much of this relies on phasing out fossil fuels. In 2015, significant strides were made in the financing of renewable energy technologies. According to the recent “Global Trends in Renewable Energy Investment” report from the U.N.’s Environment Programme (UNEP), 2015 saw record-breaking investment in renewables, totaling nearly $286 billion globally. Significantly, for the first time, more than half of the world’s new power generation capacity came from clean sources.

And it is developing nations that are leading the way. Emerging economies invested $156 billion in green power last year (19 percent year-over-year growth) compared to developed countries, which committed $130 billion (down 8 percent). China played a key role here; the country scaled up its investment by 17 percent to $102.9 billion, accounting for 36 percent of the world’s total. Meanwhile, India and Brazil raised investment by 30 percent last year to an all-time high of $36 billion.

But there are several rising stars as well — countries such as South Africa, Mexico, Chile, Morocco and Turkey are looking to fast track renewable-energy programs and projects, given the comparatively short build times they offer over fossil fuels. The falling cost of solar and wind technology has also made projects viable for these resource-rich economies.

The UNEP report also notes that Africa is one of the most promising markets for renewable energy over the next 10 to 20 years. This is due to a number of factors, such as a growing population, an urgent need for new generating capacity, lack of electricity access in remote areas, and an abundant supply of sun, wind, biomass and geothermal.

Given the wider agenda of energy access — perhaps best illustrated by U.N. Secretary-General Ban Ki-moon’s Sustainable Energy for All initiative — this trend is extremely positive. The International Energy Agency’s “World Energy Outlook Study 2015” estimates that in 2013, 1.2 billion people, 17 percent of the world’s population, did not have access to electricity.

Clean energy as the rule, not exception

Businesses have a key role to play in providing energy access to those in remote areas and poorer communities, whether its through building local infrastructure, educating people about the benefits of clean energy to create market pull for related technology, or establishing key partnerships with governments and NGOs to help finance micro-enterprises.

Making clean energy affordable lies at the heart of the renewables groundswell, whether it’s in Africa, Asia or the West. There are ongoing challenges, such as national electricity monopolies, the balance between supply and demand, and continued government support. But the outlook for future investment is bright.

The UNEP study notes that the sliding price of oil has not damaged prospects for renewables so far. While fossil fuel costs have fallen, renewables are getting more cost competitive — solar in particular. Going forward, new coal-fired plants may become more difficult to finance than those powered by cleaner technologies, given rising investor concern about exposure to stranded assets and the climate priorities of development banks.